Hong Kong's Li Ka-shing to buy UK gas assets for $1 billion

HONG KONG (Reuters) - A group of companies controlled by Hong Kong billionaire Li Ka-shing has agreed to buy UK gas company Wales and West Utilities for 645 million pounds ($1 billion), the latest acquisition by the tycoon that will boost his gas portfolio in Britain.

Octogenarian Li has been expanding his business empire by buying into regulated infrastructure and utilities assets in developed countries, especially Britain -- which is open to foreign ownership of its infrastructure assets.

Blue-chip property developer Cheung Kong (Holdings) Ltd (0001.HK) said it had formed a joint venture with Cheung Kong Infrastructure Holdings Ltd (1038.HK), Power Assets Holdings Ltd (0006.HK) and the Li Ka Shing Foundation Ltd to buy the company, which is involved in the management of gas transportation assets and gas distribution in Wales and the southwest of England.

“We are pleased to have the opportunity to acquire another high-quality asset, which is poised to extend our growth momentum and generate recurring profit contributions similar to that of our other infrastructure projects,” Kam Hing-lam, group managing director of Cheung Kong Infrastructure, told reporters.

Wales and West Utilities’ distribution network area supplies 7.4 million customers in an area of 42,000 square kilometers, or almost one-sixth the area of the UK, while the total length of the main gas pipeline is about 35,000 kilometers.

The consortium involved in the deal, which is expected to be completed at the end of September subject to European Commission approval, said it agreed to buy the British firm from several investment and fund management companies including Macquarie Global Infrastructure Funds 2 SARL.

Wales and West Utilities would add to Li’s assets in Britain, where he agreed to buy utility Northumbrian Water Group last August for 2.41 billion pounds and further cement his reputation as a savvy deal-maker, which has earned him the nickname “superman” in local media.

In 2010, Cheung Kong Infrastructure and Li’s other investment arm, Power Asset Holdings, agreed to buy the British electricity distribution networks of France’s EDF (EDF.PA), which provide power to London and southeast Britain, for 5.8 billion pounds.

The news comes as Cheung Kong Infrastructure, which is controlled by Li’s conglomerate Hutchison Whampoa Ltd 0013.HK and is leading the consortium, plans a share placement.

A term sheet seen by Reuters on Tuesday said Cheung Kong Infrastructure planned to raise up to $307 million. Its shares were suspended on Wednesday morning and a company executive said it was related to a share placement.